All rights reserved. When it comes to covered calls, you have two approaches: The first is a hedging strategy if you think a stock may be selling off, but you want the security in your portfolio. By selling covered calls against it, you are handing off any potential upside and offsetting a portion of a possible loss in the near term during the term of the covered calls contract. My preferred method of using covered calls, however, make money selling covered calls the second approach: generating income from a long-term diversified portfolio. You keep the premium no matter. That was a big error, because the company transformed itself in ways I never expected, and over the past decade-plus, MSFT stock has performed admirably.